outline a capital raising strategy from 3 different sources describing how and why each one is applicable to this specific company.
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You are the CFO of Millie Tech Ltd. outline a capital raising strategy from 3 different sources describing how and why each one is applicable to this specific company.
Company name: Millie Tech Ltd.
- Investment required: $250,000
- Equity Considered to be offered for this investment: 20%
- Product: Wearable device for animals that translates noises they make into simple, English language audible demands
- Idea: Innovative, Scalable, Targeted to growing segment
- Target Market: General consumers
- Prototype: ‘Beta’ phase launched
- Patents: Pending
- Management Team: Experienced, Motivated
- Strategic Relationships: development partnership Buffalo Bill & Precious Inc., a well established community dog training company
- Product Rollout or Sales: Patent is still pending
- Founder’s Investment to Date: $180,000
- Profit: $0
- Revenue: $50,000
- Management (Option Pool): $0
- Industry (Price/Sales) Ratio: 7.5X
- Estimated Average Value of Successful Startups in the region: $1,300,000
- Expected Sale Price on Exit: $21,000,000
- Investor’s Required ROI: 10X
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- “It is Well with my Soul" (IWMS) Co. is evaluating an investment proposal to manufacture GB pen drives, which has performed well in test marketing trials conducted recently by the company’s research and development division. The following information relating to this investment proposal has now been prepared. Initial investment GH¢ 3 million Selling price (current price terms) GH¢ 20 per unit Expected selling price inflation is provided as follows: Years 1 2 3 4 Selling price Inflation rate 3% 4% 5% 6% Variable operating costs (current price terms) GH¢ 8 per unit Fixed operating costs (current price terms) GH¢ 150,000 per year Expected operating cost inflation 5 % per year The research and development division has prepared the following demand forecast as a result of its test marketing trials. The forecast reflects expected technological change and its effect on the anticipated life-cycle of GB pen drives. Years 1…MINI CASE The Castillo Products Company was started in 2008. The company manufactures components for personal decision assistant (PDA) products and for other handheld electronic products. A difficult operating year, 2009, was followed by a profitable 2010. The founders (Cindy and Rob Castillo) are interested in estimating their cost of financial capital since they are expecting to secure additional external financing to support planned growth. Short-term bank loans are available at an 8 percent interest rate. Cindy and Rob believe that the cost of obtaining long-term debt and equity capital will be somewhat higher. The real interest rate is estimated to be 2 percent and a long-run inflation premium is estimated at 3 percent. The interest rate on long-term government bonds is 7 percent. A default-risk premium on long-term debt is estimated at 6 percent; plus Castillo Products is expecting to have to pay a liquidity premium of 3 percent due to the illiquidity associated with its…All parts are under one question, per your policy all parts can be answered. 3. Analysis of an expansion project Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Yeatman Co.: Yeatman Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales 3,000 3,250 3,300 3,400 Sales price $17.25 $17.33 $17.45 $18.24 Variable cost per unit $8.88 $8.92 $9.03 $9.06 Fixed operating costs $12,500 $13,000 $13,220 $13,250 This project will require an investment of $15,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecation at t = 0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project’s four-year life. Yeatman pays a constant tax rate of 25%, and it has a weighted average cost of…
- Consider how Root Valley River Park Lodge could use capital budgeting to decide whether the $13,000,000 River Park Lodge expansion would be a good investment. Assume Root Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) (Click the icon to view additional information.) The internal rate of return (IRR) of the expansion is Data table More info example 10-12% Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Root Valley Useful life of expansion (in years) Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion Discount rate Get more help. 12-14% Print 15-16% 16-18% S Done 122 skiers 149 days Assume that Root Valley uses the straight-line depreciation method and expects the lodge expansion to have no residual value at the end of its nine-year life. The project is expected to have an average annual net cash…2. PhysisPharm plc. is a UK-based pharmaceutical company using natural ingredients in most of their medicine. The R&D department has created five prototypes of new medicine, and the management are analyzing them in terms of investment appraisal. Years/ cash flows in £000s Project 0 1 2 3 4 A -80 40 30 30 20 B -50 10 20 30 40 C -120 -30 80 90 100 -40 20 30 30 E -90 30 40 40 20 The company has only £150,000 of investment capital available in Year 0, meaning that capital rationing exists at Year 0, but not in Years 1 to 4. The appropriate discount rate used is 10%. Which projects should be selected to be undertaken: a) If projects are divisible. b) If projects are not divisible. DBarne plc is considering production and sale of a new type of coffee machine. This will allow them to expand production over the next 7 years and support the drive to sell more of their successful range of products for domestic use. There are two investment options, C4 and C5, for coffee machine and information about the initial investment and four different capital investment appraisal measures are given in the table below. The cost of capital is estimated at 8%. The board of directors of Barne plc is about to attend a meeting to consider which option to choose. The IRR measure was added after the original board papers were released. When asked to estimate the IRR before calculating it, the company's Finance Director confidently stated that it would be "well over 8% for both options." Table1: initial investment option and appraisal methods Investment option Initial investment Accounting rate of return Payback period NPV @8% IRR@10% 10.9% £1200000 13% 2.67 years…
- Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $228,000 and would yield the following annual cash flows. 1. Assuming that the company requires a 12% return from its investments, use net present value to determine which projects, if any, should be acquired. 2. Using the answer from part 1, is the internal rate of return higher or lower than 12% for Project C2?Prepare the financial section of a business case for the Cloud-Computing Case that is listed above this assignment in Canvas. Assume that this project will take eight months to complete (in Year 0) and will cost $600,000. The costs to implement some of the technologies will be $300,000 for year one and $200,000 for years two and three. Estimated benefits will start in year 1 at $400,000 and will be $600,000 for years 2 and 3. There is no benefit in year 0. Use the business case spreadsheet template (business_case_financials.xls) template provided below this assignment in Canvas to calculate the NPV, ROI, and the year in which payback occurs. Assume a 7 percent discount rate for the template. notes* Payback occurs in the first year that there is a positive value for cumulative benefits - costs. (*Negative values are presented in parenthesis) What I have so far is attached I need to make it so Pay back occurs in year 3 where there is positive cumulative benefits - costs.Instruction: Please answer the following questions. Submit your answers (word file or PDF). Minimum of words are 300 words. Questions. Describe the positives and negatives for this development project. FIGURE 2.1 Project Evaluation and Selection Form EVALUATION CRITERIA Investment (5) Return on Investment Time to Market Increase in Market Share PROJECT EVALUATION AND SELECTION PROJECT A $700,000 9.1% 10 months. 2% Risk Chance of Success Comments Project A: Major competitor already has similar product and may reduce price. Project B New technology may not work as expected. Project C Product features may not be accepted in some international markets Low High PROJECT B $2,100,000 18.3% 16 months 5% High Medium PROJECT C $1,200,000 11.5% 12 months 3% Medium High Susay at day a
- ences Mc Graw Hill ! 1 Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1 million in a start-up firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's operations of the two firms he is considering and give him some business advice. Q Variable cost per unit (a) Sales revenue (8,400 units × $31.00) Variable cost (8,400 units x a) Contribution margin Fixed cost Net income Required Required B Company Name Operating leverage 7 2 Required a. Use the contribution margin approach to compute the operating leverage for each firm. b. If the economy expands in coming years, Larson and Benson will both enjoy a 10 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will…Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 10% return from its investments. Initial investment Net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 Pool Spa IRR Pool $ (177,000) % % 41,700 57,700 81,995 92,100 66,700 Compute the internal rate of return for each of the projects using excel functions. Note: Round your answers to 2 decimal places. Spa $ (122,000) 33,700 51,700 67,700 73,700 25,700You are looking for security for your business. Your firm does highly confidential work so you absolutely must have security. You have found two options. The first option is a high tech solution with door sensors, motion detectors, cameras and card readers for door access. The second option is rather low tech. You would upgrade your door locks and hire a guard to be on duty overnight. The costs for each of these options is shown below. If your cost of capital is 8% which option should you select? Support your answer with the appropriate discounted cash flow analysis. Upfront CostAnnual CostLength of ContractHi Tech$200000$ 8,0007Low Tech$ 10,000$ 50,0003
